Correlation Between Allient and United Fire

Can any of the company-specific risk be diversified away by investing in both Allient and United Fire at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Allient and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allient and United Fire Group, you can compare the effects of market volatilities on Allient and United Fire and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Allient with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and United Fire.

Diversification Opportunities for Allient and United Fire

-0.52

Correlation Coefficient

Allient  United Fire

Excellent diversification

The 3 months correlation between Allient and United is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Allient and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and Allient is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Allient are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Allient i.e., Allient and United Fire go up and down completely randomly.

Pair Corralation between Allient and United Fire

Given the investment horizon of 90 days Allient is expected to under-perform the United Fire. In addition to that, Allient is 1.48 times more volatile than United Fire Group. It trades about 0.0 of its total potential returns per unit of risk. United Fire Group is currently generating about 0.02 per unit of volatility. If you would invest  2,888  in United Fire Group on December 26, 2024 and sell it today you would earn a total of  27.00  from holding United Fire Group or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allient  vs.  United Fire Group

Allient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allient is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

United Fire Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, United Fire is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Allient and United Fire

The main advantage of trading using opposite Allient and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient position performs unexpectedly, United Fire can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Fire will offset losses from the drop in United Fire's long position.

The idea behind Allient and United Fire Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.